You wake up every day dreading the collection calls, worrying about what bills will arrive in the mail, and wondering if you have enough credit left on your last credit card to buy groceries. If this is how you have been living, why not make getting out of debt your New Year’s resolution? There are several ways you can take control of your finances, and this is a great time to explore your options and make a plan.
If you’re considering bankruptcy, find out if it’s the right choice for your family’s financial situation. Call Padgett & Robertson at 251-342-0264 to schedule a consultation now.
Get a Clear Picture of Your Finances
Before you can make a plan to get control of your finances, you have to know where you stand financially. Make a list of your income sources and how much they bring in each month. Make a list of your debts, their minimum payments, how much you owe, and when the debt is to be paid in full. Take note of your other financial obligations and how often they occur.
This should give you a broad overview of where you stand. If your monthly payments and obligations are significantly lower than your income, you know that you have enough money to pay your debts. It might just be a matter of getting your spending under control. If your monthly payments exceed your income, you are in a crisis situation that requires immediate action.
Decide How to Tackle Debt
How do you want to tackle your debt? Do you want to use the snowball method and pay off the smallest debt first so you can roll those payments into your larger debt payments? Do you want to pay them off from the highest interest rate to the lowest interest rate? Or are you more concerned about getting rid of the largest monthly payment first? There are benefits and downsides to every method.
Create a Realistic Budget
With your goals in mind, create a realistic and practical budget for your household. By realistic, we mean not cutting back so far that your budget is impossible to follow. Consider how much money you truly need for groceries, gas, hobbies, housing, and other expenses. This is an important part of figuring out where you stand.
If there is no possible way to make a budget that allows you to meet all of your obligations, then you may need to take more drastic action. If you create a realistic budget that indicates you should still have some money left over each month, figure out where you’re losing money. Maybe you’re shopping too much or dining out when you should be cooking at home, or perhaps your money is frittered away on smaller expenses every day, such as that $5 cup of coffee at Starbucks.
Know When You’re In Over Your Head
You can’t budget your way out of every situation. In some circumstances, you truly have no realistic way of paying your debt back. If you were to try, you could spend decades living on a shoestring budget without making much progress due to high-interest rates and balances that are nearly impossible to make any headway with. If you cannot make your payments and you see no way out of your financial hole, it might be time to consider a Chapter 7 bankruptcy.
Bankruptcy gets a bad rap, but it is necessary sometimes. While your credit will take a serious hit in the short term because of it, it’s likely that your credit is already suffering if you are in this situation in the first place. By declaring bankruptcy and changing your approach to money, you may be able to get a fresh start and create a new future for your family.
To qualify for bankruptcy, you must meet certain income requirements and have debt that you truly cannot pay off. An experienced attorney can take a look at your financial records and help you determine whether or not bankruptcy is a viable option for you.
Contact Padgett & Robertson to Discuss Your Bankruptcy Options
A Chapter 7 bankruptcy could be the solution to your financial problems as you start the New Year. If you’ve spent years under the weight of crushing debt, you may not even know how much it’s affecting your health and wellbeing. Now is the time to find out if bankruptcy is your way out.